President Donald Trump sat surrounded by coal miners Tuesday as he signed an executive order calling for agencies to rescind a review of federal coal leasing and lift a temporary moratorium on new leases.
Just before signing the order, Trump turned to the men behind him. “Basically, you know what this says?” he asked one. “You know what it says right?”
“You’re going back to work,” the president answered himself.
What impact the president’s actions will have on the western coal industry remain questionable. In the same speech, Trump referenced his intents to “unlock job producing natural shale gas.” Economists have said competition from natural gas is more responsible for coal’s decline than government regulation.
While energy and environmental law experts say unraveling the Clean Power Plan might involve a protracted legal fight, eliminating the moratorium on new coal leases on federal land should be relatively simple for Secretary of the Interior Ryan Zinke. Along with the moratorium, Trump’s order directs Zinke to “take all steps necessary and appropriate to amend or withdraw” the review of the coal leasing program.
Supporters of the moratorium say it was specifically designed not to interfere with mine production, while the Bureau of Land Management reviewed the federal coal leasing program. They suggest the moratorium played no role in the wave of layoffs that struck Wyoming coal country just over a year ago.
Industry advocates, however, say it hindered coal companies ability to plan long term. They also say the coal leasing review was a politically motivated effort and the end result would have deliberately left coal mining uncompetitive.
In Wyoming, the BLM says there are six coal lease applications subject to the moratorium. One is held up by agency headquarters, though the Wyoming office has approved it as being exempt from the moratorium. Of the other five, none have been blocked by the moratorium.
A lease application by Peabody Energy’s Rawhide mine received an exemption to the rule. Another application, from Alpha Natural Resources’ Belle Ayre mine, paused when the company entered bankruptcy. Contura Energy, a spin-off from Alpha with control of Alpha’s Wyoming mines, has not indicated whether it will pursue the lease, Brad Purdy with the Wyoming BLM said.
None of the other three lease applications in the state have been held up by the moratorium, Purdy said.
Even if leases weren’t held up in the short term, coal companies were still affected by the uncertainty the moratorium created, Travis Deti, director of the Wyoming Mining Association said. “This is not an industry that operates on a year-to-year basis.”
The news agency Reuters reported today that big coal companies, including Peabody Energy, Arch Coal and Cloud Peak Energy have enough coal reserves to last a decade under current leases.
Deti’s organization was not entirely opposed to a review of the leasing program, he said. However, coal companies worried it was politically motivated, and would have inevitably lead to higher royalty rates. “Just because royalty rates have been in place for a long time doesn’t mean you have to raise them just for the sake of raising them,” he said.
The Wyoming Mining Association also worried about the Obama administration’s attempts to estimate a social cost of carbon, based off the hazardous effects of climate change. “It’s too nebulous,” Deti said. That measurement was also rescinded by Trump’s order.
There is an overwhelming consensus in the scientific community that climate change is being driven by human generated carbon dioxide. The EPA originally estimated the Clean Power Plan, which Trump’s order also seeks to unwind, could save the U.S. between $55 billion and $93 billion per year by 2030 by deterring costs incurred from climate change and pollution.
The last review of the federal coal program was three decades ago during the Reagan administration, Shannon Anderson, an attorney with the Powder River Basin Resource Council, said. Her organization lobbied for five years to get the coal review program started. She did not believe the program had a predetermined outcome, and noted it went through months of public comment, including in Wyoming.
“I think the Obama administration was interested in all the input here,” she said. The moratorium, she said, was “very carefully crafted not to stop mining.”
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Anderson agreed that climate change was a big driver for the review. The federal coal leasing program is the single biggest driver of climate change in the country, she said. “It’s really a question of whether you as a nation set climate policy at the leasing stage.”
In the 25 minute press conference that preceded the signing, the president did not mention “climate change,” once, despite the subject of the order. Nor did Zinke, Secretary of Energy Rick Perry, EPA Director Scott Pruitt or Vice President Mike Pence.
Zinke, who spoke before Trump, voiced his support for the executive order by echoing the political rhetoric of western coal country. “Our nation can’t run on pixie dust and hope,” he said, “the last eight years showed that.”
The exact meaning of the phrase was unclear, but it could be a reference to the stalled economic growth Trump often claimed on the campaign trail.
He also said that in some western communities coal jobs were not just the best jobs, but often the only jobs.
To Dan Bucks, a former director of the Montana Department of Revenue and outspoken advocate for a review of coal mining, the coal dependency of some western communities is one more reason to push for a higher return.
Just under half of federal revenues on coal leasing are returned to the state of origin. The money could be used by coal communities in the Powder River Basin to adjust to new market circumstances by retraining workers, educating residents and drawing new industries, he said.
From his experience setting Montana’s coal tax, Bucks said, he came to the conclusion that royalties and leasing fees are not big enough to affect the final cost and the demand for coal.
“It’s not big enough to affect the number of jobs, it’s not big enough to affect the amount of coal sold,” he said. “But it is big enough to affect the amount of money the coal communities get.”
Coal companies might find a buyer but the real problem is Oregon and Washington are closing shipping ports.
The BLM conducts a comprehensive review every time there is an application to lease federal coal. The BLM has dramatically raised the up-front bonus bids for every new lease in the Powder River Basin to hundreds of millions of dollars per lease. Coal companies risk this up-front money with no assurance that they will be able to sell that coal. A combination of factors has led to a complete halt in federal coal leasing in Wyoming, cutting off a major source of funding for new school construction. The moratorium is an artificial constraint on market economics and I am glad to see it lifted. Those who wish to see the public receive an actual return, instead of a feel-good theoretical return, on federal minerals should be glad too.